The government’s opposition to expansion at airports in the southeast will have a “dramatic effect” on the UK economy, according to Richard Gooding OBE, chief executive of London City airport.

Speaking at the ITT conference in Benidorm today, Gooding said the decision by the Conservative-Liberal Democrat coalition to scrap the planned addition of a third runway at Heathrow and prevent expansion of Stansted and Gatwick would lead to a serious shortage of capacity.

“Some people forget the UK is an island,” he said. “If people can’t get off the island, how can we continue to be the trading power we have traditionally been?”

He argued that the capacity shortfall would not be met by growth at other airports, including London City, Luton and Bristol, and the construction of a planned high-speed railway.

“We should be better served by trains but it is naive to think they will replace growth in aviation,” he added.

“The government’s move to a per-aircraft tax rather than per passenger will benefit airlines with high loads and damage those with smaller loads.

“The government believe they can increase this tax without damaging the economy. They expect the take from APD to go up 40% – everyone is going to be worse off.”

Gooding urged delegates to lobby government over APD.

“Use your lobbying powers to at least get a study group going. If we don’t lobby government over APD we will rue the day.”

As Heathrow fills up, London City is preparing to pick up the overspill by introducing more parking stands and expanding its terminal. It aims to grow to eight million passengers a year, from the current three million.